Calls were made about the suspect - who was thought to be in possession of a real firearm - and officers swooped outside The Den on Tuesday night.
The bar was described as 'dead' during the sting - and police later revealed the 'gun' was a realistic-looking toy.
Assault rifles were pointed at the 34-year-old man while police dogs searched the area.
The man was believed to have been drinking in the bar before the altercation.
Witness Paddy Chadderton, 42, said: “Den bar is a popular bar usually but I think it was dead at the time.
“I’d actually just mentioned to my wife about five minutes before it all kicked off that it was bizarrely quiet.
“Everything was such a rush, I nearly got knocked over the police rushed over so fast.
“Next thing I know the guy was on his knees surrounded by four police officers carrying assault rifles pointing directly at him.
“I didn’t see it myself but other customers told me he was aggressive and threatening towards staff and other customers.
“Police dogs were all sniffing about, you don’t expect to see this on a Tuesday night in Harrogate.”
A North Yorkshire Police said in a statement: “A 34-year-old man was arrested on Cambridge Street, on suspicion of possessing an imitation firearm with intent to cause fear of violence.
“An imitation gun was seized which, although it was made of plastic, appeared realistic.
“The man remains in custody at this time.”